WASHINGTON (AP) — The U.S. economy grew at a solid 4.1percent annual rate from July through
September, the fastest pace sincelate 2011 and significantly higher than previously believed. Much of
theupward revision came from stronger consumer spending.TheCommerce Department’s final look at growth in the
summer was up from aprevious estimate of 3.6 percent. Four-fifths of the revision came fromstronger consumer
spending, primarily in the area of health care.The4.1 percent third quarter growth rate came after the
economy expandedat a 2.5 percent rate in the second quarter. Much of the accelerationreflected a buildup in
business stockpiles.Economists expectgrowth has slowed to between 2 percent and 2.5 percent in the
currentquarter, in part because they believe inventory growth has slowed.Thethird quarter rise in the gross
domestic product, the economy’s totaloutput of goods and services, was the best performance since a
4.9percent increase in the final three months of 2011.Still,analysts expect that for the year, the GDP will
only expand by around1.7 percent, down from the 2.8 percent growth of 2012. Much of thatdrop-off occurred
because consumer spending was depressed by highertaxes that took effect last January and the
government’sacross-the-board spending cuts. The Congressional Budget Office hasestimated those two factors
shaved 1.5 percentage points from growth in2013.But the drag from the government is expected to lessen
in2014. The latest outlook for the National Association for BusinessEconomics predicted growth of 2.5
percent in 2014.Outside thevolatility caused by changes in stockpiles, many analysts say theeconomy has
begun to improve in the current quarter. Steady hiring haslowered the unemployment rate to a five-year low
of 7 percent. And muchof the November data so far have been upbeat.Consumer spending atretail businesses
rose by the most in five months. Factories increasedoutput for the fourth straight month, led by a surge in
auto production.Builders broke ground on homes at the fastest pace in more than fiveyears, strong evidence
that the housing recovery is accelerating despitehigher mortgage rates. Auto sales haven’t been better since
therecession ended 4½ years ago. And the stock market is at all-time highs.Analysts will pay close attention
to consumer spending in the fourth quarter. It drives 70 percent of economic growth.Thegovernment
significantly boosted consumer spending in Friday’s reviseddata, increasing it to a 2 percent growth rate,
up from just 1.4 percentin the previous estimate, which has been the slowest pace since late2009.Economists
said Friday that the new-found strength in thethird quarter was an encouraging development but the period
was stilldominated by an unsustainable buildup in inventories which will act as adrag on growth in the
current quarter.Pierre Ellis, an economistat Decision Economics, said that the final look at third quarter
GDPdid offer hope that growth will strengthen in coming months, given thegreater strength in consumer
spending.Congress gave finalapproval Wednesday to legislation that reduces federal spending cuts andaverts
the risk of another government shutdown early next year. Theprospect of less fiscal drag next year has led
many economists topredict a better year for the economy in 2014.A stronger outlookfor the economy and job
market prompted the Federal Reserve this week tobegin winding down its bond-buying program, which was
intended to lowerlong-term interest rates and encourage more borrowing and spending.TheFed said Wednesday
that it would begin reducing its $85 billion-a-monthin bond purchases by $10 billion in January. Fed
Chairman Ben Bernankesaid that if the economy keeps improving, the bond purchases will betrimmed by similar
amounts at coming meetings next year.Copyright 2013 The Associated Press. All rightsreserved. This material
may not be published, broadcast, rewritten orredistributed.